Klir Technologies to close down

After seven years and $12 million in capital, Klir Technologies has decided to pull the plug on its software for managing information technology systems. James Maiocco, co-founder and chief executive, said the 15-person company had a tough time transitioning from a direct sales model to one which sold software as a service.

“At the end of the day, we just didn’t have enough gas in the tank to turn the corner,” said Maiocco.

Employees were notified Tuesday, though the last day at the company will be today. At its peak, Klir employed 27 people and was recognized by Network World as one of the top 10 IT management companies to watch.

Klir plans to pay severance to employees and cover health care costs for the month of August, with Maiocco saying that board has been “incredibly responsible” and “nobody will be left holding the bag.” All creditors will be paid, he said.

Klir had more than 100 large enterprise customers for its commercial product and 10,000 registrations for a free service that it introduced late last year. The company is working closely with potential partners in order to provide a smooth transition for its customer relationships.

Klir raised $8.7 million in venture capital from Ignition Partners, Fluke Venture Partners and MK Capital in May 2005. At the time, I wrote a story that painted the company as a high-tech survivor. (In retrospect the headline probably wasn’t the best.)

Why not raise more money?

Maiocco said the company had an “incongruent capitalization structure” which made it difficult for new and existing investors.

“It just didn’t pencil out,” he said.

As a venture-backed startup, Maiocco also said it is tough to switch gears.

“You are not a conglomerate that can afford to pursue six different business models. You are placing a bet on a business model and you can’t go out after that business model half-heartedly. You have to attack it intensely, which we did. Unfortunately, pursuing our business through a direct sales model was just not cost-effective. So by the time we repositioned the technology and changed gears to a software-as-a-service distribution model, we just ran out of gas in the tank.”